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Goldman Sachs lowers nCino stock target amid guidance uncertainty, but sees long-term upside

EditorAhmed Abdulazez Abdulkadir
Published 2024-12-05, 06:14 a/m
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Goldman Sachs (NYSE:GS) remains optimistic about nCino's prospects for fiscal year 2026, especially if the regulatory environment becomes less stringent or if interest rates create a more favorable environment for mortgage origination. With a market capitalization of $4.91 billion and InvestingPro analysts projecting profitability this year, the company shows promising potential. Dive deeper into nCino's growth prospects with InvestingPro's exclusive financial health scores and detailed analysis reports.

With a market capitalization of $4.91 billion and InvestingPro analysts projecting profitability this year, the company shows promising potential. Dive deeper into nCino's growth prospects with InvestingPro's exclusive financial health scores and detailed analysis reports. The adjustment follows nCino's third-quarter fiscal year 2025 earnings report, which revealed revenue and profitability that surpassed consensus expectations. This success was largely attributed to a significant performance in the mortgage sector.

Goldman Sachs remains optimistic about nCino's prospects for fiscal year 2026, especially if the regulatory environment becomes less stringent or if interest rates create a more favorable environment for mortgage origination. With a market capitalization of $4.91 billion and InvestingPro analysts projecting profitability this year, the company shows promising potential. Dive deeper into nCino's growth prospects with InvestingPro's exclusive financial health scores and detailed analysis reports.

The updated guidance reflects a cautious stance due to a combination of slower core business growth and the recent reversal in mortgage rates following the Federal Reserve's initial rate cut in mid-September, which contributed to an increase in mortgage churn by about $2 million. However, nCino's reported billings and remaining performance obligations (RPO) both saw an acceleration, each growing by 19% year over year compared to 12% and 8% in the second quarter, respectively.

Goldman Sachs remains optimistic about nCino's prospects for fiscal year 2026, especially if the regulatory environment becomes less stringent or if interest rates create a more favorable environment for mortgage origination. The firm acknowledges that the below-consensus organic guidance at year-end introduces uncertainty that could affect nCino's stock in the near term.

Looking further ahead, Goldman Sachs continues to have confidence in the company's comprehensive commercial banking platform, its partner ecosystem, technology, and potential for growth through updated pricing strategies. They expect these factors to contribute to accelerated growth and improved profitability as the company scales.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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